well, for a japanese to use it, it supposedly is demeaning...
but look at it this way.. for a racist to try to use a "demeaning" term is actually praise, therefore i asked "why should it"..
the word is actually derived from the word "gaikokujin" which means "foreigner"..
but the japanese were such a closed society in the past, that xenophobia and all that is the norm rather than the exception.. the word "gaijin" is used to emphasise someone who "did not belong".. as in "you are not one of us"..
as one who is pretty glad he's not one of them, i would actually be bloody happy to be called a gaijin by them.. it's just my perverse and warped nature